Milling & Baking News Corporate Profiles - 2017 - 62

Retail revolution

up about 8% of total consumer packaged goods sales, said
Jordan Rost, vice-president of consumer insights.
"With foods and beverages, it's a little bit lower than that,"
he said.
"I think where we have seen some of the early developments
with food and beverages in particular are with center-store
categories, generally the packaged foods," Mr. Rost said. "We
see particular development in the snacking categories - so
nuts, crackers, snack bars."
He added, "The brick-and-mortar trajectory is still trending
downward, and e-commerce is growing so fast."

Welcome to the jungle

further, said Rob Moskow, an analyst with Credit Suisse, New York.
"Both Amazon and Whole Foods have a reputation for being
tough customers and are likely to exert significant power over
their suppliers," he said.
Adding to the pressure may be how other retailers respond
to maintain competitiveness in the market.
"Other retailers are not standing still," Mr. Vitaro said. "WalMart and Kroger have introduced/expanded click-and-collect
options, which appeal to busy consumers. Additionally, WalMart's acquisition of jet.com has dramatically expanded their
omni-channel effectiveness.
"Some regionals have increased their value and store brand
offerings, while others have strengthened prepared foods offerings or added in-store cooking events."

Amazon closed on the acquisition of Whole Foods Market
on Aug. 28 and promptly announced price reductions at stores
throughout the country. Mr. Vit aro of the Berkeley Research Adapting to change
Group called the acquisition a "game changer."
Additional retail trends that will affect food and beverage
"The combination of Amazon and Whole Foods, with revised companies include consumers continuing to purchase nonpricing, combines a best of breed business model for perish- perishable items on-line, polarization of the market with
ables and non-perishables," he said. "This model delivers con- value and premium offerings pushing out "middle market,
venience and value for nonhomogenized products," and
perishables and quality and
decreased demand for profreshness for perishables.
foods, Mr. Vitaro said.
'One of the biggest cessed
Further advances in distribuFood companies are rapidchanges I've seen in ly attempting to adapt to the
tion, subscription and convethe marketplace is a change.
nience will enable this business model to place greater
"We've been focused on elot of brick-and-mortar
pressure on traditional grocommerce,
but we are doupartners are now really
cers."
bling
down
a bit more than
dialing up their efforts
Additional plans by Amawe had in the past with the
on omnichannel.' dedicated team, a reinvestzon for the incorporation of
Whole Foods include making
ment of additional resources
Amazon Prime Whole Foods'
and really partnering closely
- Michele Buck,
customer rewards program
with our customers," Michele
The Hershey Co.
available through such platBuck, president and c.e.o. of
forms as Amazon.com, AmaThe Hershey Co., Hershey,
zonFresh, Prime Pantry and
Pa., said in a July 26 conferPrime Now. Whole Foods' private brands also will be available ence call with securities analysts to discuss the company's fithrough each of the platforms.
nancial results. "One of the biggest changes I've seen in the
A new addition to Whole Foods stores will be Amazon lock- marketplace is a lot of our brick-and-mortar partners are now
ers. Customers may have products shipped from Amazon.com really dialing up their efforts on omnichannel. Those clickto their local Whole Foods for pickup, or consumers may send and-collect and multiple forms of home delivery and then, of
returns back to Amazon via the lockers.
course, there are the pure plays out there.
For food companies, the merger between Amazon and Whole
"So, I guess, I think about that business in two ways. One,
Foods may signal additional margin pressures in the future.
I think that we have an opportunity to say, how do we capWith food companies already reengineering their sup- ture the planned nature of how consumers purchase in that
ply chains and packaging to fit into Amazon's system, the on- channel and dial that up and really capture that on our business.
line retailer's leverage with the companies may increase still And at the same time, several of our retail partners have come to

62 \ October 2017

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